China’s Neutral Price Action

Testing the strength of a strangle in the FXI  For the past 10 years, U.S. stock markets have tended to move in a single direction: up. This has been a challenge for options sellers with a neutral assumption on the market. Strategies like strangles have been tested on their upper breakevens through the past 10 … Continued

False Prophets Get It Wrong About Profits

New data suggests it pays to concentrate on managing stocks that are gaining value, not the ones in decline  For the last 100 years, Wall Street has been dispensing this advice to investors: “Cut your losses and let your winners run.” The adage formed the basis of trading discipline. The problem is that it’s not … Continued

(Covered) Call to Action

Savvy investors can turn a 401(k) or IRA into a facsimile of a covered call Americans store a big chunk of their investments in 401(k) plans or IRAs for two reasons. First, employer matching funds can add up. Second, participants can’t easily withdraw cash to buy an iPhone or a take a tour of Europe. … Continued

Taking Futures to a New Level

Advanced uses of futures include scalping, pairs trading and delta hedging Futures contracts offer retail traders some strategic advantages that aren’t available with stocks and exchange-traded funds (ETFs), including scalping, pairs trading and portfolio hedging. Scalping may seem obvious, but futures scalping offers two advantages over scalping stocks or exchange-traded funds: tax efficiency and freedom … Continued

11 Trades for 6 Outlooks

By Anton Kulikov & Mike Hart The research team at tastytrade created the options strategy flowchart below to serve as a mental roadmap in the trade decision process. As with nearly everything in the world of  options, the first metric to consider is volatility. Here, the implied volatility rank breaks down into two categories: high … Continued

The Butterfly Payoff

What’s the right environment for the butterfly spread? While short straddles and strangles are great trades when investors want to speculate that a stock will not move much, the risk can seem too great. The long butterfly provides a potential alternative. A butterfly spread has low probability and low risk. That means there’s a low … Continued

Theta: Money for Nothing

Ready to make a profit just by letting time pass? With “theta,” it’s a distinct possibility Imagine making money just by letting time go by. Savings accounts accomplish that but they’re about as exciting and profitable as watching paint dry. Luckily, there’s another way, and it’s called “theta.”   Traditionally, the only way to try … Continued

The Short Put

The moving parts of a short put have scared off many investors. Let’s clear up misconceptions so traders can take advantage of the benefits